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TMI Blog2010 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... Is the Constitution of a fact finding inquiry commission / authority legally permissible de-hors the provisions of the Commission of Inquiry Act, 1952? (ii) Should resort to Section 11 of the Commission of Inquiry Act, 1952, necessarily result in the application of Sections 8B and 8C of the said Act to the proceedings before the Inquiry Authority / Commission? (iii) Is the right to demand copies of the documents and affidavits, the right to be represented by a legal practitioner and the right to cross-examine the witnesses examined by the Commission available to a noticee independent of Section 8B and 8C of the Act aforementioned before an Inquiry Authority / Commission established otherwise than under the provisions of the said Act?" 3. As far as the question No.(i) is concerned, the Division Bench, after hearing the learned counsel for the parties and placing reliance on P.R. Nayak v. UOI & Ors. ILR 1973 (1) Delhi 747 and Brahma Nand Gupta v. Delhi Administration & Ors. 41 (1990) DLT 212, concurred with the legal position stated in the said decisions and eventually did not find any merit in the contention raised by Mr.Sawhney, learned counsel appearing for the writ petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual received any money or other consideration from, or paid any money or other consideration to, any Government, agency, company, firm or individual in connection with the purported transactions in oil under the United Nations Oil-For-Food Programme pertaining to contracts bearing numbers M/9/54 and number M/10/57. (4) To inquire into any other aspect or matter relevant to the Inquiry pertaining to contracts bearing number M/9/54 and number M/10/57. (5) To make any recommendations or suggestions that the Inquiry Authority may consider necessary or proper." 6. As is evident, the Commission issued a notice to M/s Hamdaan Exports of which the present petitioner is a partner as it thought that he had the information on such points or matters which may be useful for, or relevant to, the subject of the inquiry. Be it noted, prior to the same, the Commission had framed a set of guidelines / order called Justice R.S. Pathak Inquiry Authority (Regulation of Procedure) Order, 2006 and the petitioner was required to ensure compliance with the said order. It is worth noting that after setting up the one-man Commission, the Central Government issued a notification on 11.11.2005. It is ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to file the statement of facts. On 3.5.2006, the respondent No.2 sent a reply stating that the filing of his statement of facts through an advocate was not permitted under the Rules of Procedure; however, extension of seven days was granted for filing of his personal statement. On 9.5.2006, the respondent No.2 issued a notice requiring the petitioner to appear in person alone alongwith all documents either in original or copies thereof which are in his possession. The petitioner submitted before the respondent No.2 that since the enquiry which was going to be conducted in respect of the affairs of the petitioner was likely to affect his reputation by any adverse comments and findings, he must be granted an opportunity of hearing as he had the statutory right under Sections 8B and 8C of the Act. As pleaded, the petitioner filed an affidavit before the Commission and appeared before the respondent No.2 wherein he was confronted with the documents. 8. We have only enumerated the facts to appreciate the question No.3 that has been referred to the larger Bench and not for any other purpose for eventually after the reference is answered, the matter has to be placed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, that Government may, subject to the prohibition contained in the proviso to sub-section (1) of section 3, by notification in the Official Gazette, direct that the said provisions of this Act shall apply to that authority, and on the issue of such a notification that authority shall be deemed to be a Commission appointed under section 3 for the purposes of this Act." [Emphasis added] 12. The submission of the learned counsel for the petitioner is that once the Government issues the notification in the Official Gazette, the authority is deemed to be a Commission appointed under Section 3 for the purposes of the Act and if Section 3 is read in proper perspective, it would become a Commission for all purposes and would have the power under Sections 8B and 8C of the Act. Section 3 of the Act deals with the appointment of a Commission. As there is a reference to the proviso of sub-section (1) of Section 3, it is thought apt to reproduce sub-section (1) of Section 3 in entirety. It reads as under: "3. Appointment of Commission - (1) The appropriate Government may, if it is of opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by [each House of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou must surely, unless prohibited from doing so, also imagine as real the consequences and instances, which, if the putative state of affairs had in fact existed, must inevitably have followed from or accompanied it...... The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit or imagine to boggle when it comes to the inevitable corollaries of that state of affairs." 14. In Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661, the majority in the Constitution Bench have opined that legal fictions are created only for some definite purpose. Their Lordships referred to the decision rendered in East End Dwellings Co. Ltd. v. Finsbury Borough Council, 1952 AC 109 to highlight that a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. 15. In Hira H. Advani v. State of Maharashtra, AIR 1971 SC 44, while dealing with a proceeding under the Customs Act, especially sub-section (4) of Section 171-A wherein an enquiry by the custom authority is referred to, and the language employed therein, namely, "to be deemed to be a judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a statute an artificial construction of a word or phrase that would not otherwise prevail, but in each case it would be a question as to with what object the legislature has made such a deeming provision. In St. Aubyn and Ors. v. Attorney General 1952 A.C.15 at p.53 Lord Radcliffe observed thus: "The word 'deemed' is used a great deal in modern legislation. Sometimes it is used to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible." After making these observations the learned Law Lord went on to hold that it was in the last of the three ways (indicated in the observations) that the deeming provision was made in S.58(2) of the Finance Act, 1940, which came for interpretation before the House of Lords. Similarly in Words and Phrases, Permanent Edition, Vol. 11A at page 181 it is explained that the word "deemed" is also used to mean "regarded as being"; it is equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, AIR 1988 SC 191, M. Venugopal v. Divisional Manager, Life Insurance Corporation of India, (1994) 2 SCC 323 and Harish Tandon v. Addl. District Magistrate, Allahabad, (1995) 1 SCC 537 and came to hold that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the Court has to examine and ascertain as to for what purpose and between which persons such a statutory fiction is to be resorted to and thereafter the courts have to give full effect to such a statutory fiction and it has to be carried to its logical conclusion. 20. In State of Maharashtra v. Laljit Rajshi Shah & Ors., AIR 2000 SC 937, it has been held as follows: "6. ... It is a well known principle of construction that in interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed the view as follows: "The dominant purpose in construing a statute is to ascertain the intention of the Parliament. One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity in the language of the provision the Court should adopt literal construction if it does not lead to an absurdity. The first question to be posed is whether there is any ambiguity in the language used in Rule 40. If there is none, it would mean the language used speaks the mind of Parliament and there is no need to look somewhere else to discover the intention or meaning. If the literal construction leads to an absurdity, external aids to construction can be resorted to. To ascertain the literal meaning it is equally necessary first to ascertain the juxtaposition in which the rule is placed, the purpose for which it is enacted and the object which it is required to subserve and the authority by which the rule is framed. This necessitates examination of the broad features of the Act." 23. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others (1987) 1 SCC 424, their Lordships hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding an appeal under Section 27 of the Act on the date of the commencement of the Act. A contention was advanced that "as amended by this Act" qualifies the word or term "provisions". Their Lordships posed the question whether the tenant who had applied for relief under Section 28 when that Section was in force would be entitled to have the application disposed of in accordance with the provision of that Section though it remained undisposed of on the date the Amendment Act came into force. In that context, their Lordships referred to the principles of statutory interpretation and opined thus: "8. The principles that have to be applied for interpretation of statutory provisions of this nature are well established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the Legislature has made them retrospective; and the retrospective operation will be limited only to the extent to which it has been so made by express words, or necessary implication. The second rule is that the intention of the Legislature has always to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se at hand, the phrases used in the Section has to be given due weightage. 29. In view of the aforesaid analysis, we have no scintilla of doubt that when resort is taken to Section 11 of the Act, it does not necessarily result in the application of Sections 8B and 8C of the Act to the proceedings before the enquiry authority / commission when the power of exclusion or non-inclusion has been specifically exercised by the competent government. 30. The next question that requires to be dwelled upon is as to whether any right to demand to be represented by a legal practitioner and to cross-examine the witnesses examined by the Commission is available to a noticee independent of Sections 8B and 8C of the Act before an Inquiry Authority. There can be no trace of doubt that Sections 8B and 8C fundamentally pertain to the applicability of the rules of natural justice. By virtue of the notification issued under Section 11, the said provisions have not been made applicable to the Authority / Commission. Thus, there is a deliberate exclusion. The question that emanates for consideration is when there is an exclusion of this nature, whether the doctrine of audi alteram partem would get attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cardinal rule to the maximum extent permissible in a given case. It must not be forgotten that "natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances". The audi alteram partem rule is not cast in a rigid mould and judicial decisions establish that it may suffer situational modifications. The core of it must, however, remain, namely, that the person affected must have a reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise. That is why Tucker, L.J., emphasised in Russel v. Duke of Norfolk [1949] 1 All Eng. Reports 109 that "whatever standard of natural justice is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case". In the said case, Kailasm, J, while dealing with the concept of applicability of natural justice, referred to the decision in Union of India v. J. N. Sinha (1970) 2 SCC 458 and held as follows: ".... Rules of natural justice cannot be equated with the fundamental rights. As held by the Supreme Court in Union of India v. J. N. Sinha (1970) I SCR 791, that "Rules of natural justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the legislature. Whether or not the application of the principles of natural justice in a given case has been excluded, wholly or in part, in the exercise of statutory power, depends upon the language and basic scheme of the provision conferring the power, the nature of the power, the purpose for which it is conferred and the effect of the exercise of that power. (See Union of India v. Col. J.N. Sinha, (1970) 2 SCC 458. 33. The next general aspect to be considered is : Are there any exceptions to the application of the principles of natural justice, particularly the audi alteram partem rule ? We have already noticed that the statute conferring the power, can by express language exclude its application. Such cases do not present any difficulty. However, difficulties arise when the statute conferring the power does not expressly exclude this rule but its exclusion is sought by implication due to the presence of certain factors : such as, urgency, where the obligation to give notice and opportunity to be heard would obstruct the taking of prompt action of a preventive or remedial nature......." [Emphasis added] 33. In Liberty Oil Mills & Ors. v. Union of India & Ors., (1984) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the taking of prompt action, such a right can be excluded. This right can also be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion; nor can the audi alteram partem rule be invoked if importing it would have the effect of paralysing the administrative process or where the need for promptitude or the urgency of taking action so demands, as pointed out in Maneka Gandhi's case at page 681. If legislation and the necessities of a situation can exclude the principles of natural justice including the audi alteram partem rule, a fortiori so can a provision of the Constitution, for a Constitutional provision has a far greater and all-pervading sanctity than a statutory provision...." [Underlining is ours] 35. In S.N. Mukherjee v. Union of India (1990) 4 SCC 594: AIR 1990 SC 1984, the Constitution Bench, while dealing with the applicability of the principles of natural justice, has opined thus: "39. .... The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ends of justice or to make the law "lifeless, absurd, stultifying and self-defeating or plainly contrary to the common sense of the situation" and this rule may be jettisoned in very exceptional circumstances where compulsive necessity so demands. 82. Bhagwati, J. (as the learned Chief Justice then was) in Maneka Gandhi speaking for himself, Untawalia and Murtaza Fazal Ali, JJ. has stated thus: (SCC p. 290, para 14) ".... Now, it is true that since the right to prior notice and opportunity of hearing arises only by implication from the duty to act fairly, or to use the words of Lord Morris of Borth-y-Gest, from „fair play in action‟, it may equally be excluded where, having regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its implication and even warrants its exclusion." 83. Thus, it is seen from the decision in Maneka Gandhi that there are certain exceptional circumstances and situations whereunder the application of the rule of audi alteram partem is not attracted." 37. After so stating, their Lordships referred to a passage from Paul Jackson in Natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of removal under the said provision. We are in complete agreement with the High Court's view in this behalf." 40. In Mangilal v. State of M.P., (2004) 2 SCC 447, while dealing with the principle of applicability of natural justice in awarding compensation under Section 357(4) of the Code of Criminal Procedure, 1973, their Lordships have observed thus: "10. ...It has always been a cherished principle. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice where substantial rights of parties are considerably affected. The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment..." 41. The learned counsel for the petitioner has submitted that when his reputation is likely to be affected, the doctrine of audi alteram partem has to be made applicable, otherwise he would be condemned unheard. It is urged by him that Article 21 of the Constitution of India in its expanse includes reputation. In this regard, he has drawn inspiration from the decision in Board of Trustees of the Port of Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice as "the natural sense of what is right and wrong". While, however, deciding Hookings v. Smethwick Local Board of Health (1890) 24 QBD 712, Lord Esher, M.R. instead of using the definition given earlier by him in Vionet case (supra) chose to define natural justice as "fundamental justice". In Ridge v. Baldwin (1963) 1 WB 539 (QB at p.578), Harman L.J., in the Court of Appeal countered natural justice with "fair-play in action", a phrase favoured by Bhagawati, J. in Maneka Gandhi (supra). In H.K. (An infant), Re (1967) 2 QB 617 (QB at p.630), Lord Parker, C.J. preferred to describe natural justice as "a duty to act fairly". In Fairmount Investments Ltd. v. Secy. to State for Environment (1976) 1 WLR 1255 Lord Russell of Killowen somewhat picturesquely described natural justice as "a fair crack of the whip" while Geoffrey Lane, L.J. in R. v. Secy. of State for Home Affairs, ex p Hosenball (1977) 1 WLR 766 preferred the homely phrase "common fairness". 21. How then have the principles of natural justice been interpreted in the courts and within what limits are they to be confined? Over the years by a process of judicial interpretation two rules have been evolved as representing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rights of the parties was required to adopt a judicial approach even though the decision by itself might not take effect, the proceeding would be quasi-judicial. The principles of natural justice would be applicable also to authorities who are called upon to submit a report for further consideration by some other body. The learned single Judge further held that when the interest of a person is likely to be affected and when the reputation is likely to be affected, fair opportunity had to be granted. 44. On a studied scrutiny of the enunciation of law in the field, it is clear as crystal that the principles of natural justice are presumed to be attracted unless they are expressly excluded or its exclusion can be inferred or deduced by necessary implication. In the case at hand, Sections 8B and 8C were incorporated in the statute book in the year 1971. It has a flavour and fragrance of the applicability of the principles of natural justice or to put it differently, the principles of natural justice have been statutorily embodied. The submission of Mr. Vaidyanathan, learned senior counsel, is that when the statute introduces or specifically incorporates the principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he competent government and resort is taken to Section 11 of the Commissions of Inquiry Act, 1952, it does not necessarily result in the application of Sections 8B and 8C of the Act to the proceedings before the Inquiry Authority / Commission. (ii) The legislature has the power to exclude the applicability of the principles of natural justice either expressly or impliedly and when Sections 8B and 8C of the Act have not been made applicable to the Inquiry Authority / Commission while issuing a notification under Section 11 of the Act, the doctrine of audi alteram partem stands excluded. (iii) Once the applicability of Sections 8B and 8C of the Act have not been made applicable to the Inquiry Authority / Commission which actually tantamounts to exclusion of the said provisions, a noticee, especially in an inquiry of the present nature which is a fact finding or preliminary inquiry, has no right to demand copies of the documents and affidavits or to be represented by legal practitioner or to cross-examine the witnesses examined by the Commission in the inquiry. (iv) Whether the opinion formed by the Government for not applying Sections 8B and 8C of the Act to an Authority / ..... X X X X Extracts X X X X X X X X Extracts X X X X
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